Lawyers at Bernstein Litowitz Berger & Grossmann had spearheaded a lawsuit against the bank, where investors like the Louisiana Sheriffs’ Pension and Relief Fund and the City of Tallahassee Retirement System said that they had been misled about the quality of mortgage-related bonds that the bank sold them from 2006 to 2008.

Bloomberg

Citigroup agreed this year to settle the lawsuit for $730 million. It continued to deny the claims but said it was anxious to move on.

Judge Sidney Stein of the Southern District of New York approved the settlement in August. But Thursday, he said that the lawyers at BLB&G had requested too much money: 20% of the settlement, or about $146 million.

Stein said that a 16% reward, or about $117 million, would be more reasonable.

Stein added that the law firm was “certainly deserving of an award for its efforts in this litigation” and noted that the lawyers had reviewed more than 42 million pages of documents in litigation that lasted four and a half years. But he also noted that he had a responsibility to avoid allowing a “windfall” for the lawyers at the expense of the investors.

– Christina Rexrode

Christina Rexrode covers banking for MarketWatch in New York. Follow her on Twitter @chris_rexrode. Follow The Tell on Twitter @thetellblog.

Story Conversation

About The Tell

The Tell is MarketWatch’s fast and engaging look at trends and themes in the day’s markets. Drawing on our reporters, analysts and commentators around the world, as well as selecting the best of the rest online, The Tell is all about the pulse of the markets through news, insight and strategic information to help you make the best investing decisions. Got a tip? Tell us at TheTell@MarketWatch.com